Dynatrace (DT) Navigates Market Skepticism With Product Expansion

Dynatrace, Inc. (NYSE:DT) is one of the best affordable tech stocks to buy right now. On February 4, KeyBanc Capital Markets’ Eric Heath lowered his price target on Dynatrace Inc (NYSE:DT) to $50 from $60 and maintained an Overweight rating on the shares. This is Heath’s second price target reduction in less than a month; he cut from $69 to $60 on January 12. For this second cut, Heath cited a “mixed outlook” as the rationale.

Nevertheless, the analyst noted that several “idiosyncratic drivers” could accelerate Dynatrace’s Annual Recurring Revenue, or ARR, in Q3; they include the company’s Dynatrace Platform Services (DPS) driving consumption growth, improving go-to-market productivity, and the scaling of its log management capabilities. And the positive customer feedback at Dynatrace’s recent Perform conference is another bright point, noted Heath.

But despite the potential catalysts, KeyBanc acknowledged that investor sentiment remains cautious. The firm noted that Dynatrace isn’t widely viewed as the market leader in a competitive landscape. It also faces questions about its relevance to AI-native companies, stated Heath.

Late last month, on January 30, Rosenblatt took KeyBanc’s direction by cutting its price target on Dynatrace from $67 to $60 but left the Buy rating unchanged. The firm said that the price target cut reflected comparable multiple compression and ongoing macro spending concerns impacting enterprise software.

Rosenblatt said it expected Dynatrace to report in-line third-quarter results. It anticipated a 16% growth in subscription revenue, 17% ARR, and Net Revenue Retention (NRR) around 111% at the upcoming earnings release. They also expected progress from Dynatrace’s sales coverage realignment around higher-value strategic accounts as a positive factor in the company’s growth outlook.

Dynatrace, Inc. (NYSE:DT) provides software intelligence solutions for monitoring and optimizing application performance, cloud infrastructure, and digital user experiences. Its platform uses artificial intelligence to deliver observability across applications, microservices, and hybrid cloud environments.

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Disclosure: None. This article is originally published at Insider Monkey.